The student loan debt crisis has left promising young professionals faced with a massive $1.2 trillion bill after college graduation, which equates to almost $30,000 per person. But two senators who can relate to this struggle have a plan that will make the debt easier to manage.
Sen. Marco Rubio (R-FL) and Sen. Mark Warner (D-VA) yesterday sponsored a bill that would establish a universal system of federal student loan repayment based on the borrower’s income. Known as the Dynamic Student Loan Repayment Act, the bipartisan proposal would combine three federal loans— Grad PLUS, subsidized and unsubsidized Stafford loans — into one. The borrower would then repay the new loan through an income-based system that would limit payments to 10 percent of his or her paychecks. Borrowers could also prepay at any time without penalty.
The idea of this legislation is to ensure students have a reasonable monthly payment while at the same time preventing them from defaulting on their loans. As a result, loans would become both safer for the borrower and a better investment for the federal government. It is important to note, however, that the Repayment Act does not have any reforms that will make borrowing less necessary to begin with so students will still be facing massive debt after they graduate. Finding a way to make college more affordable to begin with should be the next step in reforming the student loan program.
For both Warner and Rubio, the fight for student loan reform is also personal. After graduating from Harvard Law School, Warner owed approximately $15,000 after law school graduation and admitted that he may not have been as willing to engage in business risks had he graduated owing significantly more. Warner has gone on to build up a net worth of $200 million thanks to his ventures in the telecommunications industry and continued royalties from it. Rubio's case is more severe. When he was sworn into office in January 2011, Rubio still owed more than $100,000 in student loans despite graduating from the University of Miami's law school 15 years earlier. He finally finished paying off his debt at end of 2012 thanks to proceeds from his autobiography "An American Son." Without the book, he may have been paying off loans until the end of his life. In both Rubio's and Warner's cases, neither would have been able to attend college without student loans.
Our nation's college graduates will serve as this country's next generation of leaders and the last thing we need to be doing is sidelining these young people with unaffordable debts that could derail their dreams. While the Repayment Act does not completely solve the student debt crisis, it will make post-graduation easier to manage and help more fulfill their potential.